Ensuring business survival during Covid-19

Ensuring business survival during Covid-19

Manufacturers have been hit hard by the impact of Covid-19. Jim Griffin, Managing Director of Nottinghamshire automotive parts manufacturer Interflex, explains the proactive steps firms can take to ensure survival.

I’ve always believed that in business, apparent disasters can also provide opportunities if you look closely enough. True, it’s hard to see many positives within the current situation, and everyone is quite rightly, braced for a difficult recovery. However, those who hold their nerve, plan for the future and demonstrate flexibility are likely to emerge from lockdown more quickly - and more successfully.

Working in automotive manufacturing for over three decades has proven to be an effective training ground for the current crisis. Our industry can be volatile and is often significantly affected by global events. Supply chains are complex, and supplier margins were already tight prior to the lockdown, but it’s also an industry that has potential for recovery and growth if managed well.

Learning from the past

The recession that started back in 2007 was one of the UK economy’s stiffest challenges for decades. Although this situation is both unprecedented and very different in origin, there are some basic principles of leadership and management that are equally applicable now, whatever industry you work in.

It’s easy to panic, especially when situations escalate rapidly as they did with Covid. But, as a business owner or manager, it’s crucial to stay calm and weigh up the options to ensure any decisions made have been thought out, rather than made as a knee jerk reaction. The people in a team take their cue from their leader, so taking a positive, measured approach will filter down throughout your organisation.

How well do you know your business?

Your chance of leading your organisation successfully at any time, but especially during a crisis, will be hugely enhanced if you know the company’s position: the finances, future projections, outgoings and state of the order books. Build a good cashflow plan, spend time analysing it, then break it down and work on how you could plug the gap.

This has been a major issue for almost every business since March, and we have been fortunate that whatever your opinion of the government’s handling of the pandemic, the financial support has been generous and efficiently managed. If you already had a robust cashflow, you will be better placed to withstand the crisis, but there are also streams of funding currently available – take advantage of these now, even if you don’t think you need them; they won’t be around forever. During the crisis, we have managed our cashflow carefully and have had weekly dial-ins with our bank to maintain a useful two-way communication. That supportive relationship has been important in ensuring we maximise the opportunities available for finance to support a programme of diversification and to help us plan ahead.

Tell it as it is

During the last recession, I was MD of an automotive parts manufacturer in Warwickshire. We had significant cashflow issues at the start, but we quickly put a viable survival plan in place. We were upfront with our staff and shared the basics of the situation with them. We explained that any layoffs would be temporary and that when they returned to work, they would have the opportunity to make up lost wages through overtime before any new staff were hired. This honesty is important in building a sense of loyalty and that ‘we are all in it together’. In this situation, everyone has something to lose and it’s crucial to maintain communication; with both staff and customers.

During Covid, we have set up regular calls to our furloughed workers to ensure they are OK and to reinforce the message that we are still in business; that this is a hiatus that we plan to emerge from. We did the same with our customers. Although no one was in a position to make anything during most of lockdown, we maintained communication with customers and those in our target markets, holding sales meetings via online platforms and keeping our sales pipeline open. We also embarked on a PR campaign to raise our profile and send a positive message to staff and customers: we’re still here and ready to start production as soon as you need us to.

Look for opportunities

Being passive and hoping things will get better on their own rarely works during tough times; it’s important to be proactive even when you feel so much is out of your direct control. During the initial lockdown when the factory was closed, members of the management team who weren’t furloughed took the opportunity to take stock of the company. We looked at potential new markets as well as different ways of doing things. The fact that I had only become MD a few weeks prior to lockdown was both an advantage and an obstacle. It meant that I wasn’t tied to a particular way of operating, but it also meant that I had to learn about the business pretty quickly and revise the plans we had begun to put in place.

Identify where the demand is

We looked at what we could offer as a company and where demand was. The shortage of PPE was big news and it seemed a perfect fit. We had machines that could be utilised to manufacture PPE, with skilled operators and ample space for production and storage. We put out a news story about factory availability and our potential capacity for PPE production which made the BBC national news - and suddenly the phones went crazy.

There were some complexities around the paperwork and setting up a new company within the Interflex brand, but adapting the factory was relatively straightforward. However, it’s a steep learning curve entering a new market so quickly and not ideal. We didn’t have any contacts at first but have been building a customer base steadily and actively marketing the new products through e-shots and an online e-shop as well as through PR and networking. Usually I’d advise researching a new market but due to the speed of the changing situation we had to learn about new products and customer expectations almost overnight. It was also a challenge sourcing materials and ensuring that we have a good ongoing supply, but as automotive supply chains tend to be complex, we already had expertise in this area.

Although diversification was forced upon us, it has enabled us to maintain production and fill the gaps in production. It was always the plan to move into new markets and by manufacturing PPE, it has also diluted our reliance on the automotive sector. In fact, this short-term solution is likely to have significant long-term benefits, ultimately placing us in a stronger position. We have a way to go with Covid and seeing how the economy bounces back, but with two different production streams operating in two different markets, the signs are promising for a good year despite the hiatus of lockdown.

Future planning

Covid will pass, but I guess the biggest challenge is the fact that we have never been in this situation before. The uncertainty of not knowing when or how the pandemic will end, and the fact that we have no real data as yet on how the economy is reacting as we come out of the lockdown has made it difficult to plan as we normally would. This has been addressed by having different plans for different contingencies to maintain flexibility and our ability to respond to a variety of scenarios.

What’s the future for your industry?

It’s easy to focus on short-term survival when times are tough, but this needs to be balanced with a longer-term view. What is the prognosis for your sector’s recovery? This will impact on a range of issues from opening up your organisation, to branding to financial planning. As far as the automotive industry goes, it’s hard to predict with accuracy, but there are some reasons for optimism. People may have less disposable income for luxuries like a new car but there are also signs that the ‘hail and ride’ trend is declining for health reasons, and that owning a car may now be preferable to public transport for the younger generation.

There is also talk of repeating the scrappage scheme – although the Department for Business, Energy & Industrial Strategy has denied that this is on the cards. However, the £7bn automotive plan that France recently announced appears to have had an impact on car sales already, so much will depend on possible government incentives and strategy. Currently customer ordering is erratic, making it difficult to manage bringing employees back from furlough, although the increased flexibility of the furlough scheme has helped ease the process.

Although a recession following lockdown seems inevitable, with very different origins it seems unlikely that the 2020 recession will endure as long as the one that started in 2007. Despite the lack of warning around Covid, just as in the last recession, we are anticipating that our company could well emerge stronger than when the crisis began. Being proactive and adopting an adventurous approach has seen us through so far, and we will continue to embrace this attitude by looking into more new markets and further opportunities over the next 12 months.

 

Author of this COVID-19 Business Support Hub Article

Jim Griffin Managing Director, Interflex

Jim Griffin

Jim Griffin is Managing Director of automotive parts manufacturer Interflex, a specialist supplier of acoustic, NVH and sealing solutions for the automotive industry.

Jim has over three decades of experience working in the automotive insulation industry. He has been shortlisted for the Guardian Small Business Leader of the Year and has also won the EEF Manufacturing Champion for the Midlands award.

Jim has been awarded a Visiting Industrial Fellowship by Aston Business School in recognition of his contribution to business growth and entrepreneurship.

He has also served as Vice Chair of the West Midlands branch of the EEF.

How to get in touch with Jim Griffin

www.interflex2000.co.uk 

 

 

COVID-19 Business Support Hub

These are challenging times for business and although our ethos is to only shout about good news, we've created COVID-19 Business Support Hub on the Love Business the website to support you with expert tips, advice and ideas from your fellow businesses to help you get through this COVID-19 crisis. 
 

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